This article provides insights into the latest developments and trends impacting the operating environment across the value chain of the Flexible Intermediate Bulk Container (FIBC) Industry
Challenges in Global Economy
Despite a strong economic recovery in 2021, the global economy is still facing many challenges that are forecast to slow down growth in the next few years. In 2022, global GDP growth is expected to slow to 3.0% and then 2.3% in 2023. There are many risks that could have negative impacts on the global economy.
Europe has been facing an enduring energy crisis for some time now, and the geopolitics of the situation has only made things worse. With the costs of going without Russian gas increasing tenfold, Flexible Intermediate Bulk Container Manufacturers are finding it hard to stay competitive in the FIBC global market.
The economy in the US is at a high risk for a recession in the fourth quarter of 2022 with an inflation rate of 4.6%. Even though inflation has been lowering and the labour market has been doing better than expected, confidence levels are still low as consumer demand, output of flexible intermediate bulk containers manufacturers, and rapid monetary policy tightening remain weak.
In Q4 of 2022, China’s GDP growth remained well below its target for the year. This ongoing slowdown is being driven by the country’s zero-COVID policy, which has dampened domestic demand and caused a profound market crisis. As a result, China is dragging the Flexible Intermediate Bulk Container Bags market down as well.
The global recession has caused sea freight costs to drop, but carriers are responding by reducing the number of boats in operation and cancelling sailings if there aren’t enough goods to transport. This is causing problems for the road freight industry in both Europe and North America, as increased freight costs, driver shortages, and higher diesel prices are making it difficult for the flexible intermediate bulk containers manufacturers to compete.
Raw Material Regional Market Dynamics
We have observed a decrease in raw materials indexes over the past few months, while energy and production output have both gone down, (though in China, the indexes don’t accurately reflect real purchasing prices). Some additives and materials, such as EVOH and aluminum, remain at high price levels, and their supply situations are still very tight.
The Impact on FIBC Market
Customers need suppliers to be adaptable to new opportunities and requests, including custom container packaging, and sustainability, whilst also being able to manage their FIBC stock and cash flow efficiently.
Producers are struggling financially as costs increase and demand decreases, leading to capacity reduction. They are also having difficulty adjusting workers’ salaries to manage inflation. Furthermore, Flexible Intermediate Bulk Container Bags traders and producers are urgently trying to reorient their sales to make up for the lower demand. Finally, sanctions on Russia are blocking exports via HS code, resulting in shortages of 1 Loop FIBCs, having customers look for custom container packaging solutions elsewhere.